As time increases for an amortized loan,the ________ decreases.
A)interest paid per payment
B)principal paid per payment
C)the outstanding loan balance
D)both A and C

Question

Quizplus · Accepted Answer

For an amortized loan, the total amount of interest paid over the lifetime of the loan remains the same, but the proportion of each payment that goes towards interest decreases as the outstanding loan balance decreases. Therefore, both the interest paid per payment (option A) and the outstanding loan balance (option C) decrease over time. The principal paid per payment (option B) may increase or decrease depending on the terms of the loan, but it is not directly affected by the passage of time.

As Time Increases for an Amortized Loan,the ________ Decreases